Starbucks has experienced significant success throughout its history, establishing a strong brand image associated with delightful aroma and flavor. Our objective is to foster a harmonious connection with our esteemed customers, dedicated employees, and valued shareholders.
Starbucks Coffee Company is the dominant force in the specialty coffee market, excelling as a retailer, roaster, and brand worldwide. It has physical stores spread across North America, Europe, the Middle East, and the Pacific Rim. Starbucks also offers its coffee and tea products through specialty operations such as its online store at Starbucks.com (Editors, 2002). The business started small with three entrepreneurs – Jerry Baldwin, Gordon Bowker, and Zev Siegel – but has since expanded exponentially to become an industry giant. With its global presence and unmatched coffee offerings, Starbucks reigns supreme in the coffee industry.
Starbucks, as an executive of the company, is proud to present our new three-year strategic management proposal plan for the years 2012-2014. We want to highlight the continuous success that Starbucks has achieved in dominating the coffee retail market and also recognize the progress we have made thus far while keeping our focus on future endeavors. The objective of this report was to determine if Starbucks can surpass its current achievements and attain even greater triumphs in the coming years. The report comprises an evaluation of the economy, a comprehensive marketing assessment plan (which encompasses market analysis and marketing strategy), a financial plan, and a recommendation for organizational structure.
In summary, the report highlights that although we are currently in a good financial position, it is crucial that we maintain our pursuit of excellence to enhance our competitive edge against rivals. Moreover, I have included financial statements and graphs depicting the company’s expected growth in the upcoming three years.
By the early 1980’s, Seattle-based Starbucks had a total of four stores operating in one geographic location. In 1982, Howard Schultz joined the company and drew inspiration from a business trip to Italy’s famous espresso bar, Milan’s. Based on his ideas, he added new products to Starbucks’ selection and realized the need for a revamp. Schultz also recognized that for the company to grow, there needed to be mutual respect between management and employees.
During the 90’s, Starbucks experienced significant growth outside of Seattle, expanding throughout the United States. By 1999, Starbucks had even reached the Middle East, and now in the 2000’s, Starbucks stores can be found everywhere. Currently, there are around 17,000 locations in 55 countries, with an expanded product range beyond just coffee. Recruitment and training have always held considerable importance for Starbucks as they seek enthusiastic individuals who share a love for coffee. Their aim is to have a diverse workforce that reflects the community they serve.
The text emphasizes that Starbucks seeks individuals who find fulfillment in their work and see it as an integral part of who they are. From its beginning, Starbucks has aimed to establish a friendly atmosphere and foster connections with customers. The company’s mission is centered around inspiring and cultivating the human spirit, prioritizing individuals, communities, and the shared experience of savoring a cup of coffee together.
Starbucks is a highly successful company with various strengths that contribute to its positive growth. As the premier seller of specialty coffee, Starbucks is known for its exceptional brand reputation, denoting excellence and customer allegiance. Furthermore, our presence spans across the United States and around the world, allowing us to serve coffee enthusiasts globally. Our achievements have consistently propelled us onto the esteemed Fortune 500 list multiple times. Above all, our dedication to prioritizing customers and valuing employees as esteemed partners has fostered an exceptional working environment at Starbucks.
The economy has posed challenges for us, particularly during the recession in 2008. However, we have made adjustments and emerged as a leading competitor in the coffee industry. Our unique offerings make us a strong choice for customers, as there are limited alternatives. Additionally, we have expanded our product range to include pastries, various tea flavors, cold beverages, and breakfast options alongside our coffee and lattes.
Starbucks has addressed customer demands by expanding its selection and offerings, which includes providing internet access at our establishments. Our dedication to ethics and customer satisfaction has resulted in industry success. Sustainability is a top priority for us, and we expect substantial revenue growth in the future. At present, Starbucks is undergoing global expansion.
Starbucks, the biggest coffee-shop chain globally, is shifting its attention from rapid expansion within the United States to enlarging its international operations (Allison, 2012). The company has set ambitious goals of opening approximately 1,200 stores at a rate of three shops per day starting in October. This growth plan encompasses both domestic and international markets. Although Starbucks acknowledges that it is not immune to the business risks encountered by other organizations, it remains positive about its future prospects despite the challenges and threats it faces.
By pinpointing these vulnerabilities and dangers, Starbucks has the ability to concentrate on enhancing those aspects in order to transform them into strengths and opportunities. The triumph of the company can now be assessed relying on the discoveries from our SWOT analysis. As long as we consistently scrutinize every facet of our organization and ensure thorough evaluation of each area, we are ensured to continue advancing. Giving priority to ongoing planning is imperative for the key personnel within the enterprise. It is crucial for us to embrace essential modifications, like introducing healthier food choices and low-fat options on our menu, which cater specifically to health-conscious individuals.
In addition, it is essential for Starbucks to broaden their range of products to accommodate customers with limited resources who wish to spend less. By identifying areas that need improvement, such as diversification, necessary market adjustments can be made. Considering the thorough SWOT analysis conducted, Starbucks demonstrates favorable prospects for the future. When examining the current market situation, it is undeniable that Starbucks outperforms its rivals in coffee sales. Nevertheless, uncertainty remains regarding the duration of the coffee trend’s sustainability and leaves ambiguity.
After experiencing closures due to the recession, we have successfully recovered and are now in a phase of substantial growth. We cater to adults, young adults, teenagers, and college students whom we make efforts to appeal to. Even though we faced strong competition from McDonalds and Burger King during the economic downturn, our exceptional customer service and high-quality coffee options set us apart from these cheaper rivals. Our dedication to delivering outstanding products is what distinguishes us in the market.
In the future, to improve efficiency, we may consider implementing drive-thru services similar to McDonald’s. The increasing popularity of fast food restaurants has attracted many customers, offering convenience for our busy clients who are always on the move. To thoroughly evaluate our marketing strategy, let’s assess the 4 p’s of the marketing mix: product, price, place, and promotion. We are expanding our product range to meet customer demands.
We have expanded our menu to include more options, particularly for breakfast. This decision was made strategically in order to better target our current market and ultimately increase our customer base, potentially even doubling it. It is important that we offer a wider selection of similar food choices due to competition with McDonalds and their sausage and chicken biscuits. Furthermore, we can add turkey and veggie products to cater to the growing trend of people embracing healthier lifestyles in America and around the world. Additionally, during the summer months, we can introduce refreshing options like smoothies, seasonal fruits, yogurts, and parfaits.
Our sandwich prices will vary from McDonalds and Burger King due to our focus on providing higher quality food items. As a result, we will adjust the prices of our breakfast items accordingly. Our goal is to offer cost savings and exceptional service in order to meet customer satisfaction. When customers purchase our coffee products, they are not only paying for the products but also for a distinctive experience. Additionally, we have more than eight thousand stores in both the U.S. and abroad, offering convenient locations to serve our extensive customer base.
Our goal is to offer the highest level of convenience with a Starbucks on every corner. Moreover, our products can be found in grocery stores and small independent retailers. We depend on our customers for promoting our brand through exceptional customer service, as positive word of mouth is an effective marketing strategy. Furthermore, let’s explore the strengths and weaknesses of Starbucks identified in the SWOT analysis.
The significance of a company’s strengths cannot be underestimated as they play a crucial role in shaping the company’s direction. Our strong brand loyalty is one of our primary strengths, as we are highly committed to our customers who are considered part of our family. Without them, our company would not exist. This loyalty and dedication have made us the leading retailer in the specialty coffee industry. Additionally, we have successfully expanded into new regions globally and remain determined for further growth. Our exceptional sales and services consistently earn us a place on the esteemed Fortune 500 list in recent years.
Our clients and employees are our top priority, as we highly value their input since it plays a crucial role in the success of our business. The introduction of new products to our menu not only motivates us but is also supported by the increase in sales. While I am confident in our ongoing success, it is essential to acknowledge both the strengths and weaknesses that Starbucks possesses.
Starbucks Company encountered a range of weaknesses, such as the high cost of their products and competition from imitators. Despite introducing new menu items, Starbucks remains primarily focused on coffee offerings, which might lose popularity in the future. Initially, Starbucks witnessed consistent expansion; however, in 2008, the company suffered a decline due to the recession. The decrease in sales can be attributed to multiple external factors like competition from other establishments and the availability of more affordable options.
Starbucks is confronted with a major challenge regarding price, as it plays a crucial role in the marketing mix. The high prices of Starbucks products render them unaffordable for many individuals. Additionally, there is an emerging trend where other companies offer similar products at more budget-friendly prices, catering to the needs of economically strained consumers. Consequently, Starbucks might experience a decrease in demand for their expensive coffee. Nevertheless, Starbucks has responded to this evolving situation by introducing packaged versions of their coffee in stores, which enables them to reach a vast customer base. To remain competitive and cater to customer preferences effectively, it is vital for Starbucks to consistently gather feedback through customer surveys.
In order for Starbucks to remain profitable, they may need to adjust their costs to match the slumping economy. Many companies are forced to do this until the economy recovers. Strategic Recommendations As I suggested earlier, we can explore drive-thru services as an alternative to dine-in services. We need to be proactive and willing to take risks in order to maintain sustainability. Diversification is also a factor we must consistently consider. Additionally, we must try to cater to urban communities by adapting our prices to meet their needs during challenging economic times.
Now that we have examined the strengths and weaknesses within Starbucks, let us consider the external opportunities and threats.
Fortunately, Starbucks has encountered numerous opportunities that have enabled significant growth and expansion. Their presence extends beyond the United States, encompassing a global reach that is advantageous for business. It is crucial for Starbucks to sustain their global marketing efforts. Maintaining ethical practices has played a pivotal role thus far, ensuring that many opportunities will arise as long as the company operates ethically.
There are various investment opportunities that can provide financial support for the company. Collaborating with other large organizations like Apple or Microsoft, as Starbucks has done in the past with HP, through acquisitions and mergers is a possibility. It would also be beneficial to work with large retail companies. Recently, we have started offering Starbucks products in grocery chains like Kroger in Atlanta, Georgia. This has expanded our market beyond just adults and college students.
Now the teenagers and younger children are requesting more cold ice coffee products, which are available in grocery stores. Moreover, the organization is facing increased competition from other restaurants and small coffee shops, which poses a significant threat. Additionally, the struggling economy has adversely affected business as not everyone has disposable income for unnecessary expenses. Instead, people are saving money due to the financial crisis. Furthermore, there are healthy initiatives that negatively portray coffee consumption because of its caffeine content, thus affecting Starbucks’ reputation.
The company faces a significant risk as both genders are actively avoiding their products, resulting in harmful negative publicity. McDonald’s and Burger King, fast food chains, offer coffee at a lower cost than Starbucks, posing as threats to the organization. The increase in competitors in the market is the main problem, further exacerbated by tough economic conditions causing store closures. In terms of organizational structure, my previous textbook discussed six types of departmentalization.
The most commonly used form of departmentalization is departmentalization by function, as it is suitable for smaller companies that offer one main product or service (Reilly, M., Minnick, C., & Baack, D., 2011, section 3.3). It is recommended that Starbucks continues to utilize functional departmentalization due to their single product services. However, for stores that offer food products and lunch, the form should be changed to simplify management’s responsibilities. As Starbucks introduces new products to their menus, departmentalization by products will consolidate products or services under one category.
Departmentalization by geographic region may be necessary to address territorial differences and adapt to increasing complexity. All managers perform the same duties regardless of their region, so modifying management efforts is important. According to the author, as companies expand and add products, services, specialists, and activities, the complexity increases. Departmentalizing by products, customers, geographic areas, and strategic business units can help managers adapt to this complexity (Reilly, M., Minnick, C., & Baack, D., 2011, section 3.2).
In times of financial success, centralized decision-making may be effective. However, once a company faces financial difficulties, it is crucial for leadership to shift their focus away from centralization and towards decentralization. In a centralized organization, the executive management team holds decision-making authority while employees simply execute their orders. Alternatively, during financial struggles, it would be beneficial to decentralize operations and involve everyone in the decision-making process.
Sometimes, the employees who are actually doing the work can provide valuable suggestions. Consequently, managers and employees can collaborate to enhance decision-making. The text mentions five structural configurations, namely simple structure, machine bureaucracy, professional bureaucracy, divisional structure, and adhocracy. Initially, Starbucks operated as a simple structure. Currently, I believe that the organizational configuration that suits Starbucks best is still the simple structure. However, with the addition of more products in the future, I recommend using the divisional structure.
Starbucks Company experienced a period of continuous growth until it faced a setback in 2008 following the recession. The decline in sales can be attributed to various external factors such as intensified competition and the availability of cheaper alternative products and services. At Starbucks, we implemented organizational changes to enhance customer satisfaction and adapt to these challenges. Financially, the future outlook for our company appears promising. The attached graphs display a positive trend over the next three years.
